Thursday, 6 January 2011

Bank Fixed deposits, more attractive & high interest

A fixed deposit is a deposit of a certain amount of money in a bank or any financial institution for certain fixed period of time. Normally the person deposited the money can be withdrawn only after the term (time period) of deposit. This is a secured investment and the depositor will get a steady income regularly or at the end of the term. Banks give a high interest rate for these fixed deposits, so that they can utilize this money for a certain period. The rate of interest is varying as per the amount of money deposited and the time period of deposit. When you deposit more money or for a long period of time, you will get high interest rate than depositing small amount of money or for a short period of time.

Banks give a good interest for these fixed deposits. You can deposit money in fixed deposit in your own bank where you have a savings account or any other bank (you have to submit residence proof and identity proof and an introducer for other banks). All public sector banks and some private banks also accept fixed deposits.

Now Banks are competing to hike the interest rate of fixed deposits. Most of the public sector banks and new generations banks are already announced the new increased interest rate for fixed deposits. Banks are giving an interest rate from 8.75% to 9.5% for long term fixed deposits. A slight difference in rate of interest is there in various banks.

An individual or an association of person can open a fixed deposit in banks. You can deposit any amount (normally Rs. 1000 or multiples thereof) for any time period (from 7 days to 10 years) in fixed deposits. If you need money before the maturity date you can take loan or overdraft against fixed deposit or you can close the account with a penalty as per the terms and condition of the deposit. Normally you will get the interest rate applicable for the time period of your fixed deposit held with the bank (a small percentage may be reduced as penalty)

Income tax will be deducted at source (TDS) from the interest of fixed deposits, if the interest in a financial year is more than Rs 10000 and you can avoid the TDS by submitting Form 15H, only if you do not have taxable income. (IF your income is less than 160000 for gents and 190000 for ladies in the financial year 2010-11)

At present almost all banks already increased interest rate and this is the time to deposit your money in fixed deposit and enjoy a good risk free income from your money.

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  1. [...] than Rs. 10000 also in fixed deposits. The main advantage of fixed deposit is that you can turn the fixed deposit to liquid money any time when you need money with a small penal interest, if you withdraw before [...]

  2. [...] of this high interest rate by opening a Fixed Deposit with any bank quite a long period of time. Fixed Deposit with banks is considered as the safest deposit ever with enough liquidity. Whenever you need money [...]